Kohl's Names Michelle Gass to Be New CEO -- 3rd Update

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Soon after joining Kohl's Corp. as chief customer officer in 2013, Michelle Gass gave employees a pep talk at the retailer's headquarters in Menomonee Falls, Wis.

Kohl's sales had begun to falter after several years of postrecession growth, and the department-store chain, like its competitors, was grappling with how to adapt to the shift to online shopping.

Ms. Gass told the gathering that Kohl's needed to think differently and shouldn't be afraid to try new ideas, a departure for the company, recalled an employee in attendance.

That openness to change has served Ms. Gass well. On Tuesday, Kohl's said the 49-year-old would succeed Kevin Mansell as chief executive in May, becoming the 55-year-old company's first female CEO.

Ms. Gass wasn't schooled in the art of selling dresses, suits and other department-store fare. After studying chemical engineering at Worcester Polytechnic Institute and receiving a master's in business administration from the University of Washington, she spent six years honing her marketing skills at Procter & Gamble Co. before joining Starbucks Corp. in 1996.

When she departed the coffee chain after nearly 17 years, CEO Howard Schultz credited her with helping develop such products as the Frappuccino.

Ms. Gass earned kudos as a marketer who "always gave very clear direction," said Craig Weatherup, a longtime Starbucks director.

Her responsibilities as chief customer officer at Kohl's included marketing and e-commerce but were expanded in 2015 to include those of chief merchandising officer, giving her responsibility for all of its products.

She pushed Kohl's to embrace the health-and-wellness trend, and helped cement a partnership with Under Armour Inc.

Ms. Gass was also behind Kohl's arrangement with Amazon.com Inc., in which the online retailer will sell its electronic devices, such as the Echo, in Kohl's stores and allow shoppers to return goods bought on Amazon at 82 Kohl's locations.

"It's kind of controversial what they did with Amazon," said David Katz, chief marketing officer of Randa Accessories, which makes products under the Levi's, Dockers and Chaps brands for Kohl's. "But it's better to at least do something than to not make decisions in this environment."

Chip Bergh, CEO of Levi Strauss & Co., called Ms. Gass "a proven leader who has been a positive force for the business."

People who have worked with Ms. Gass say she is quick to change course when an idea doesn't pan out. For example, Kohl's experimented with in-store coffee shops several years ago but abandoned the plan. "This was one of many ideas the teams experimented with," a Kohl's spokeswoman said.

The 65-year-old Mr. Mansell, who is both CEO and chairman, will retire in May. Since he joined Kohl's 35 years ago as a divisional merchandise officer, the company has grown from a dozen locations to a national chain with more than 1,100 stores, generating nearly $19 billion in annual sales.

Kohl's board intends to select a chairman from among its current independent members. Asked why he was relinquishing his board seat, Mr. Mansell said in an interview that Ms. Gass deserved the right to run the company as she sees fit without him "having a seat at the table."

Kohl's also said another top executive, Chief Operating Officer Sona Chawla, will become president in May. Ms. Chawla, 50, joined the company in 2015 from Walgreens Boots Alliance Inc., where she was chief marketing officer and ran e-commerce.

She and Ms. Gass were seen as finalists for the top job. Mr. Mansell previously told the Journal that they were most likely to succeed him, saying "they both are incredible leaders."

"We view both Ms. Gass and Ms. Chawla as strong internal promotions, with deep expertise in the omni-channel strategies that will be necessary to drive [Kohl's] next leg of growth," Jefferies analyst Randal Konik said in a research note.

Ms. Gass has her work cut out for her. The company had said sales would rise to $21 billion by the end of 2017 under a plan that included a new loyalty program, revamped beauty departments and more personalized marketing. But sales are on track to fall to $18.58 billion this year from $18.69 billion a year ago, according to FactSet.